Frequently Asked Questions
My CPA/Attorney isn’t familiar with this. Is it legal? How long have people been doing this?
The governing body of law that allows a 401(k) Plan to purchase stock in the plan sponsor was passed in 1974. Although retirement plans like this are prevalent with big corporations, their use in small corporations is relatively new. For that reason, your CPA or Attorney may not be aware of it.
How much does it cost?
Tenet Financial Group charges $4,995 to design and install the 401(k) Profit Sharing Plan. The annual Administration Fee is billed monthly at $120, starting the month after the effective date of the plan.
How long does this process take?
The average length of time to fund the corporation is 3 – 4 weeks.
Can I take a paycheck?
Yes, you can pay yourself a salary as soon as you capitalize your business (typically 4 – 5 weeks). Tenet Financial Group suggests that you consult with your tax advisor regarding salary and payroll.
Why a C-Corporation?
A retirement plan is allowed to purchase stock of the plan sponsor, so long as the plan sponsor is a “separate taxpaying entity.” The only corporate entity that is considered a “separate taxpaying entity” is a C-Corporation.
Has Tenet Financial Group completed many of these plans?
Tenet Financial Group has designed, installed and currently administers thousands of retirement plans.
What kind of support does Tenet Financial Group provide if audited?
The IRS has a formal review process that they implemented after issuing their operational guidelines in October 2008. As your Third Party Administrator (TPA), Tenet Financial Group will maintain all of your 401(k) Plan records. If you were to receive an IRS Inquiry letter, Tenet Financial Group would assist you in accurately answering all of the questions.
Since the IRS implemented their review process, Tenet Financial Group has never had a plan inquiry escalate into a full plan audit. However, if your plan was audited, Tenet Financial Group would assist you until the audit is completed.
Why should I consult with my CPA prior to starting the process with Tenet Financial Group?
Your tax advisor is an integral part to this process. To insure that your opening balance sheet is correct and the ongoing administrative responsibilities are met, we recommend that you meet with your tax advisor.
What makes Tenet Financial Group different?
Tenet Financial Group is not a sales company. We provide a very high level of customer service to ensure that the design, installation and administration of your new 401(k) plan is done correctly. For most of our clients, this process is largely unfamiliar. Because of that, we view our professional responsibility to our clients as one of our highest priorities.